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Duhig Rule Persuasive in Interpreting Oil and Gas Reservations

01.10.18 written by

In Talbot v. Ward, 7th Dist. Monroe No. 15 MO 0001, 2017-Ohio-9213, the Seventh District Court of Appeals became the first appellate court in Ohio to discuss the Duhig rule when analyzing the validity of oil and gas reservations.

In Talbot, E. M. Ward conveyed a large tract of land to Dow Mellott, reserving 1/2 of the oil and gas royalty, rentals and bonuses.  Mellott then conveyed the same tract of land to Minnie Tomolonis, subject to the following language: “[E]xcepting 1/2 of the oil and gas royalty and 1/2 of all rentals and bonuses from the above grant.”  Subsequently, Minnie Tomolonis conveyed the same tract reserving one-half of the oil and gas underlying said tract.

The main issue on appeal was whether Mellott had reserved any interest in his deed to Tomolonis.  In analyzing the facts of the case, the appellate court utilized standard rules of deed construction, but also became the first Ohio appellate court to mention the Duhig rule, as established in Duhig v. Peavey-Moore Lumber Co., Inc., 135 Tex. 503, 144 S.W.2d 878 (1940).  The Duhig rule essentially states that, if both a grant and a reservation in a warranty deed cannot be given effect, then the reservation fails.

In applying the thought process underlying the Duhig rule to the facts of the case, the Talbot court came to the same conclusion as under statutory deed construction: at the time of the Mellott-Tomolonis deed, 1/2 of the oil and gas royalty, rentals, and bonuses had already been reserved by Ward.  The appellate court ruled that the Mellott-Tomolonis deed did not reserve a new interest in oil and gas.  The Mellott-Tomolonis deed explicitly excepted 1/2 of the oil and gas royalty but was silent as to the other half.  Giving effect to the Mellott reservation would breach Mellott’s warranty of title, as the Mellott-Tomolonis deed would appear to convey more than it actually did (i.e. the deed would appear to convey 1/2 of the oil and gas royalty, but would actually convey none of the oil and gas royalty, due to the previous reservation by Ward).  Since said deed was a warranty deed, and the plain language of the deed only accounted for a reservation of one-half of the royalty, rentals, and bonuses, the other one-half of the royalty, rentals, and bonuses was conveyed along with the surface to Tomolonis, and therefore, the Mellott reservation failed.

If you have multiple oil and gas reservations in your chain of title, it is very important to talk with an attorney to determine your rights under this decision.  If you have any questions concerning this decision and the impact on your rights, please contact Attorney Greg Watts or Attorney Wayne Boyer at 330-497-0700.

NOTE: This general summary of the law should not be used to solve individual problems since slight changes in the fact situation may require a material variance in the applicable legal advice.